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LONDON (Reuters) - Anti-competition authorities may probe activity by large traders on the London Metal Exchange that also own warehouses, including investment bank JP Morgan (JPM.N), after lawmakers raised concerns.

A parliamentary committee said in a report it was concerned that the same firms that trade metals were able to hold large amounts of metal stored on the LME, the world's top metals exchange, and alerted competition authorities.

Controversy has swirled in recent months after one party gained control of up to 80 percent of lead stocks at the same time as cash premiums for the metal soared.

The Office of Fair Trading (OFT) said it was considering a report by parliament's Science and Technology Committee that referred to allegations of anti-competitive behaviour.

"There is no formal investigation open, though as always we would consider any complaints we receive," an OFT spokeswoman said.

The LME denied any improper activity was taking place and said robust regulations were already in place regarding warehouses.

The concerns by the committee emerged in a report that was largely about the availability of strategic metals, but also touched upon the phenomenon over the past few years of metals warehouses being purchased by trading houses.

"We would be concerned if a dealer were undermining the effective functioning of the market and we look for assurance that the market is functioning satisfactorily," the committee said in the report.

"We heard that there were large companies dealing metals within the UK and an allegation was made...that a company through a subsidiary may be behaving in an anti-competitive manner."

FOUR LARGE FIRMS WITH WAREHOUSES

The report said there were four very large companies that own warehouses and named U.S. investment bank JP Morgan (JPM.N), which owns warehousing company Henry Bath.

"They are, therefore, a ring-dealing member of the exchange and they also own the warehouse. That is restrictive," the committee said.

JP Morgan, Goldman Sachs and Trafigura declined to comment while Glencore was not immediately available for comment.

"There's been a dramatic change in ownership," said an analyst who declined to be named. "There's quite clearly, in banking terminology, scope for cross-selling."

The firms have said they have Chinese walls between their trading arms and the warehousing units.

But some traders worry that the trading houses are devising strategies based on information about who is holding physical metal and where it is going.

The LME in an emailed response said the assertion that ownership of a warehousing company implies anti-competitive behaviour was "unjustified and completely out of context."

"Ownership of warehousing by trading companies is not new and there are clear and robust regulations in place concerning this issue, regulations which are under constant review by the LME and our regulator the FSA to ensure the market operates in a fair, transparent and orderly manner."

The parliamentary report said the allegation about possible anti-competition behaviour was made by the Minor Metals Trade Association (MMTA), but the group said those were the personal views of its former chairman Anthony Lipmann, not the group itself.

The association said in a statement its position on warehouse ownership was clear: "The warehouse company should be neutral, not owned or associated with any trading company."

Last month, senior metal trading sources told Reuters that Glencore had moved lead stocks to LME monitored warehouses ahead of its flotation at the same time premiums for physical lead rose.

LME data showed that one entity controlled between 50 and 80 percent of inventories and the sources said Glencore was that entity.

Large holdings of LME stocks can occur unintentionally and are not unusual for large companies with many divisions and clients that delve into metals markets.

The LME can force holders of dominant positions to make metal available to other market players by imposing its lending guidelines, which are aimed at ensuring orderly markets.